NYC Housing Authority Seeks Multimillion-Dollar Advice — Quietly

November 21, 2011 at 9:59 am

The Boston Consulting Group is a major player in the government strategy market. This year, the New York City Housing Authority bought it on to replicate its Atlanta project in New York. Exactly what it's doing is not clear. City Limits/Marc Fader

As the oldest and largest public housing authority in the nation—with 414,000 residents living in 178,000 housing units spread across 344 developments whose physical plants and mechanical systems are aging out almost simultaneously amid a hostile federal funding environment—the New York City Housing Authority has a host of thorny issues it needs to tackle.

Citing the ongoing work that the private consulting firm Boston Consulting Group (BCG) is doing for the Atlanta Housing Authority, the board of the New York City Housing Authority voted unanimously in March to give BCG $6.05 million to “provide comprehensive business transformation consulting services” pursuant to the terms and conditions of the current contract “between the Housing Authority of the City of Atlanta and BCG.”

That brief description was all the information that was publicly given at the March 2, 2011, board meeting. And the resolution made barely a splash. The vote to give Boston Consulting Group (BCG) $6 million was one of five resolutions the New York City Housing Authority (NYCHA) board voted on that morning, following votes to approve a half-million-dollar emergency contract for tree removal, a $600,000 commercial lease contract and the transfer of 32,000 square feet of land and 160,000 square feet of air rights in East Harlem to a real estate consortium building a charter school, community facility and 87 units of affordable housing.

Six months later on Sept. 14, with a nearly similar lack of fanfare, the New York City Housing Authority’s board voted to extend BCG’s contract by another $4.26 million, a 70 percent increase in funding that left some in the authority doing a double take at the board’s largesse.

“In the past, with our capital projects, if a contract went before the board and the amount of the extra or percentage was this large, it would raise eyebrows, and people would get reamed,” said one NYCHA employee, a 15-year-plus veteran of the authority.

There was no incivility that morning, however, at NYCHA’s public board meeting, held in a conference room in the authority’s offices at 250 Broadway. Instead, the proposal for the contract extension was presented as a necessary but otherwise unexceptional request folded into a list of resolutions the board voted to approve, including commercial lease authorizations, capital improvements to an underground steam distribution system, and $10 million for a contract to purchase special waste-disposal bags.

There’s no question that NYCHA has a lot to think about. Since 2002 federal support for public housing operating expenses has plummeted, and capital funding has also lagged well behind the needs of an agency with buildings that are approaching 80 years old. Former Gov. George Pataki withdrew Albany support for the handful of NYCHA developments that were built by the state, and Mayor Michael Bloomberg beat a similar retreat from several city-owned complexes. The $3 billion agency has been running an operating deficit that Chairman John Rhea has pegged between $150 million and $200 million a year and has had to lay off workers despite a staggering backlog of maintenance orders—a backlog that moved from onerous to fatal three years ago when a 5-year- old boy plummeted 10 stories down an elevator shaft in the Taylor-Wythe houses in Williamsburg, trying to escape a stalled elevator.

Ostensibly, the Boston Consulting Group has been brought on to help NYCHA navigate these troubled waters. But exactly what the company is doing for its $10 million is a little hazy. NYCHA denied City Limits‘ request for a list of the policy recommendations the Boston Consulting Group has made to date because these recommendations “are not yet policy,” Jacqueline C. Hernandez, the lawyer in charge of NYCHA’s Freedom of Information Law unit, told City Limits over the phone. (NYCHA agreed to fulfill a FOIL request to release a copy of Boston Consulting Group’s original contract, but had not released it at press time.)

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